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LPL4804Conveyancing
UNIT 1: Overview of the South African land registration system
Ownership and limited real rights in land are meticulously recorded in a dedicated
government (deeds) office by way of a strictly prescribed, specialised legal
procedure referred to as conveyancing.
1. How are negative and positive land registration systems distinguishable?
A positive system implies the following:
✓ The State guarantees to bona fide third parties that the state register in the
designated deeds registry is an authoritative record of the rights to clearly
defined units of land.
✓ The State examines/investigates documentation and transactions for legality.
✓ The State completes and maintains a register of title.
✓ Register of title is linked to a cadastral system of maps and diagrams.
✓ Transfer takes place when the register of title is annotated, and any deeds
are merely endorsed.
✓ From this it follows that new deeds are not necessary for each transaction:
o as the main source of information is the deeds register which is merely
annotated/updated.
✓ Linking of different transactions occurs
✓ The State guarantees the accuracy of the deed register and is liable for
shortcomings:
o Such a deeds register is characterized by a high degree of state
interference
o (as for instance in the Torrens system, created by Sir Robert Torrens
and which is still being used in New Zealand and in New South Wales,
Australia)
,A negative system implies the following:
The State gives no guarantees to bona fide third parties regarding the
accuracy of the state deeds register.
The State simply records deed submitted at face value.
There is no examination of the deeds or investigation by the State prior to
recording
Transfer is effected in the new deed, not when the state deeds register is
annotated/updated so a new deed must be executed for each transaction.
There is usually no link to a cadastral system of maps and diagrams
Third parties cannot rely on the accuracy of the State records, which might
give an inaccurate or incomplete picture
The State incurs no liability for inaccurate or incomplete records
There is minimal state interference (as for instance in the land registration
system in the Netherlands)
2. Which system applies in the South African land registration system?
In SA land registration is based on statute (Alienation of Land Act and Deeds
Registries Act) and is unique because it is nominally negative, but has some
characteristics of a positive system as well.
While the State does not guarantee the correctness of the data contained in
the SA deeds registries, it does not simply record deeds at face value either.
It provides owners/real right holders with security of title.
Both titleholders and bona fide third parties do rely on the correctness of
the information contained in the title and deeds registry records.
It is also unnecessary for SA titleholders to insure their rights in case a
third party should subsequently prove to have a better title to the
property, as is the case with other negative registration systems.
,Barclays Nasionale Bank v Registrateur van Aktes – land which was
subject to a mortgage bond was transferred to a bona fide purchaser
without the bond first being cancelled.
The court held that the mortgagee’s secured real right was not
terminated by the transfer, and that the transferee therefore acquired
the land subject to the bond.
Until the mistake is discovered and rectified, the same principle will
apply to all subsequent transfers.
This means that the mortgagee’s rights remain intact to the detriment
of subsequent transferees although a number of subsequent transfers
may have been registered.
Standard Bank v Breitenbach – relates to the reliability and
completeness of deeds office information.
There the court held that a mortgage bond that had erroneously not
been endorsed on the title deed of the land was in fact duly registered
once the registrar had signed the mortgage bond, and that a bona fide
purchaser of the land therefore acquired the land subject to the bond.
Legato McKenna Inc v Shea (SCA) – following a motor vehicle accident
in which Ms Shea suffered severe brain injuries making it impossible for
her to manage her own legal and financial affairs, attorney McKenna of
Legator McKenna Inc was appointed by the court as curator in March 2002.
Then before receiving a letter of appointment from the Master, in April
2002, McKenna sold Ms Shea’s immovable property to Mr and Mrs
Erskine, in order to pay Ms Shea’s pressing debts.
With his signature McKenna inserted the words “curator” and
“Subject to the approval of the Master”.
The Master’s appointment in favour of McKenna was issued in June
2002 and the Master’s consent to the sale followed on 17 July 2002.
The transfer in favour of the Erskine’s was registered on 27 July
2002 and in March 2003.
, Ms Shea recovered to such an extent that the court declared her once
more capable of managing her own affairs.
Approximately a year later Shea applied to court for, among others, an
order for the return of the immovable property against repayment of
the purchase price.
The Erskines in turn instituted a conditional damage claim against
McKenna for R1.7m should the immovable property be returned to
Shea, based on McKenna’s breach of his implied warranty that he
was authorized to sell the property.
In the court a quo Shea succeeded.
The sale was declared void, so was the subsequent registration of
transfer in the deeds office.
On appeal this decision was reversed and the abstract theory of the
passing of ownership applied.
It has thus now been definitively decided that the abstract theory of
passing of ownership applies in SA.
This means that even though the original causa of a transaction
registered in the deeds office may be defective, if there is a real
agreement to transfer ownership and both parties have performed
under that real agreement, then the subsequent transfer is valid.
NB** In terms of the abstract theory, there are 2 requirements for passing ownership:
1) Delivery: In the case of immovable property, this is effected by registration of
transfer in the Deeds office.
2) Real agreement: The intention of the transferor must be to transfer ownership
and the intention of the transferee must be to become the owner of the property. Mc
Kenna’s mistake about the validity of the sale had no effect on the effectiveness
of the real agreement. In addition to other delictual or contractual remedies one
may have against the conveyancer, a prejudiced party may in some cases recover
damages from the State under s 99 of the Deeds Registries Act. However, the
claimant must prove: - the loss resulted from an act or omission of a registrar or
official employed in a registry - the act or omission was committed in bad faith or
due to failure to exercise reasonable care and diligence.
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